By JUDY NEWMAN | jdnewman@madison.com | 608-252-6156 | Posted: Wednesday, November 10, 2010 4:21 pm
Clean technology, social media and phone application companies are hot targets for investors; pharmaceutical, biotechnology tools and food-related businesses are not.
That’s what a panel of four investors told the Early Stage Symposium at Monona Terrace on Wednesday.
Tim Keane, director of Golden Angels Network, Milwaukee; Paul Carbone, director of Baird Private Equity, Chicago; Wendy Jarchow, director of business development for Chrysalis Ventures, Louisville, Ky.; and Ken Johnson, managing director of Kegonsa Capital Partners, Fitchburg, differed on the types of young companies they look for when they choose investment targets.
Keane said on-demand education is another field ripe for investment. “More and more, it’s a 30-second world,” he said, “and that’s how we learn.”
All four agreed, though, that the management team is more crucial than the product or its sales prospects.
“You’ve got to believe in the person,” said Johnson.
The entrepreneur’s determination is key, Jarchow said. “Passion goes a long way,” she said.
Carbone said there are a lot of “very interesting opportunities” — meaning, young companies looking for investors — but Baird expects a big bang for its bucks. “We look for $100 million exits,” he said.
Meanwhile, with the hard times the nation’s economy has endured, entrepreneurs will find it increasingly difficult to raise money, Carbone predicted.
“There will be compression in the number of venture capital firms, and it’s not a good thing for the Midwest,” where venture funds already are harder to land than on the east and west coasts, he said.
Some of the business leaders attending the session said they are not discouraged. Rob Herrera, chief business officer for Cell Line Genetics, Madison, which provides stem cell quality assurance services, said the search for financing has become more competitive. But, he added, “as long as a company is high quality and has a strong business plan, (it) will find investors.”
Companies also have to be prepared to adapt to industry changes, said Lisa Johnson, chief business officer for Semba Biosciences, Madison. She said Semba, which makes purification products for the food and drug industries, has benefited from cuts and consolidation among pharmaceutical companies.
“You’ve got to be able to zigzag with the market,” Johnson said.
The panel discussion was part of the two-day symposium, which continues Thursday.
Highlights on Wednesday included seven-minute presentations from 24 young, Midwest companies looking for investors, with products that range from remote heart monitoring devices to tools that speed the time it takes to install drywall.
Wednesday’s leadoff speaker Bill Joos, of Go To Market Consulting in Palo Alto, Calif., gave the group some nuts-and-bolts advice on establishing an advisory board, “the most under-utilized tool entrepreneurs have,” he said.
Joos also said he is impressed with the benefits available in Wisconsin to help young companies grow, such as tax credits for investors, angel networks and organized mentors. “You are in the right culture, the right lifestyle,” he said.
Thursday’s sessions feature the Elevator Pitch Olympics, in which 19 very early-stage companies seeking seed funds will each have 90 seconds to tell their story, about as long as an elevator ride.